ESTERO, FL – Thomas Anthony Davanzo, a Florida man, was sentenced to over ten years in prison for his role in a complex, multi-state scheme to defraud the renewable fuels market and U.S. taxpayers. The sentencing, handed down in November 2016 but finalized through forfeiture proceedings in 2017, highlights a growing federal crackdown on fraudulent activity within the burgeoning biofuel industry.
Davanzo, along with co-conspirator Robert Fedyna, operated a network of shell companies designed to exploit loopholes in the Renewable Fuel Standard (RFS) program. The scheme centered around Gen-X Energy Group, headquartered in Washington, and its subsidiary, Southern Resources and Commodities, in Georgia. These entities were used to repeatedly recycle biofuel credits – known as Renewable Identification Numbers (RINs) – by falsely claiming they represented legitimately produced fuel. Essentially, Davanzo and Fedyna purchased already-credited fuel, processed it minimally, and then fraudulently re-sold it as new, allowing for the double-dipping of federal tax credits and the generation of additional, illegitimate RINs.
Investigators revealed that between March 2013 and March 2014, the conspiracy generated at least 60 million fraudulent RINs. These were then sold to third parties, netting the co-conspirators at least $42 million. Gen-X also illicitly claimed approximately $4.36 million in false tax credits. The complex operation involved the creation of falsified invoices, bills of lading, and other paperwork to create the illusion of legitimate transactions. Funds were laundered through the shell companies to further conceal the fraudulent activity and avoid detection.
Investigation and Prosecution
The investigation, a collaborative effort between the U.S. Secret Service, the Environmental Protection Agency’s Criminal Investigation Division (EPA-CID), and the Internal Revenue Service-Criminal Investigation (IRS-CI), uncovered the elaborate network of deception. Federal prosecutors were able to demonstrate how Davanzo and Fedyna knowingly participated in the creation and distribution of fraudulent documentation, enabling the scheme to flourish. The case underscores the EPA’s commitment to policing the renewable fuels market and ensuring a fair playing field for legitimate businesses.
Sentencing and Forfeiture
Davanzo received a 121-month prison sentence, while Fedyna was sentenced to 135 months. In addition to their prison terms, both men were ordered to forfeit over $46 million in ill-gotten gains. The forfeiture included not only cash but also assets acquired with the proceeds of the fraud: gold coins, jewelry, Rolex watches, thoroughbred horses, vehicles, and multiple properties. The government’s aggressive pursuit of forfeiture aims to dismantle the financial infrastructure supporting the criminal enterprise.
Legal Ramifications
Davanzo and Fedyna were convicted of violating Title 18 U.S. Criminal Code sections 1956(h) – Conspiracy to Commit Wire Fraud – and 1349 – Conspiracy to Commit Money Laundering. A conviction under 18 U.S.C. 1956(h) carries a maximum sentence of 20 years in prison and a fine of $250,000. Violation of 18 U.S.C. 1349 is punishable by up to five years in prison and a fine of $250,000. The sentences imposed on Davanzo and Fedyna reflect the severity of the crimes and the significant financial harm caused to the U.S. government and biofuel market participants.
Key Facts
- Defendant: Thomas Anthony Davanzo
- Location: Florida, with operations spanning multiple states
- Scheme: Multi-state biofuel fraud involving the manipulation of Renewable Identification Numbers (RINs)
- Fraudulent RINs: At least 60 million fraudulently generated RINs
- Financial Impact: Over $42 million in fraudulent sales and $4.36 million in false tax credits
- Sentencing: Davanzo sentenced to 121 months in prison; Fedyna sentenced to 135 months
- Forfeiture: Over $46 million in assets seized, including cash, jewelry, horses, and properties
- Laws Violated: 18 U.S.C. 1956(h) and 18 U.S.C. 1349
Source: EPA ECHO Enforcement Case Database
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